U.S. business optimism drops in fourth quarter

Grant Thornton International Business Report cites economic uncertainty as the number one constraint to business growth in coming year.
By Modern Materials Handling Staff
January 22, 2014 - MMH Editorial

Optimism for the nation’s economic outlook among U.S. business leaders plummeted 16 percentage points in fourth quarter 2013 to a net balance of 36% according to the latest data from the Grant Thornton International Business Report (IBR), a survey of 3,300 business leaders in 45 countries.

Hiring expectations in the United States declined for the first time in the past year, with a net balance of 38% of business leaders foreseeing an increase in hiring during the coming year, down from 42% the previous quarter. In addition, net 52% of business leaders expect profits to grow, a slight decline from 54%  the previous quarter and a substantial increase from 28% a year ago. U.S. business growth expectations actually improved, with net 65% of businesses expecting to see revenues climb during the next 12 months, up from 50% in third quarter 2013 and up from 38% from the same period last year. However, a net balance of 37% of U.S. businesses leaders cite economic uncertainty as the number one constraint to growing their operations in the next 12 months.

“It’s clear that the recent gridlock in Washington is significantly contributing to the lack of confidence in, and optimism about, our economy among the nation’s business leaders,” said Stephen Chipman, chief executive officer of Grant Thornton LLP. “Our nation’s political leaders were able to reach a budget agreement, which will likely avert another costly government shutdown and extend the sequester for the next two years. However, they must now turn their attention to embracing a long-term debt ceiling solution combined with comprehensive tax and entitlement reforms that would provide a level of economic certainty that businesses are desperately seeking.”

The notion that the government shutdown affected optimism about the economy correlates with other recent research from Grant Thornton LLP, which indicated that 60% of CFOs believe the state of the U.S. economy will remain the same or worsen during the next six months because of similar uncertainty.

The lack of optimism in the U.S. economy is consistent with what is occurring in other global markets. Global business optimism fell to a net balance of 27%, down five percentage points from third quarter 2013. Optimism among Chinese business leaders declined following a 27 percentage-point increase to net 31% in the previous quarter. In fourth quarter 2013, business optimism in the world’s second largest economy fell to a net balance of 22%.

Brazil business optimism also dropped significantly from a net balance of 31% to 10%, a record low for the IBR. Russian optimism declined from a net balance of 19% to just 1%, its lowest since 2011.



Subscribe to Logistics Management magazine

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your
entire logistics operation.
Start your FREE subscription today!

Recent Entries

As was the case for the second quarter, third quarter earnings results for publicly-traded less-than-truckload (LTL) carriers are again strong. Signs of solid earnings results from carriers that have posted earnings to date include tonnage increases, gains in weight per shipment and average daily shipments, higher yield, and revenue per hundredweight.

While the holiday season is known to bring good tidings and cheer to all, it may also come with another thing that is not so pleasant: higher rate freights. That was the thesis of a commentary written by Mark Montague, industry pricing analyst and chief market-watcher for DAT, a Portland, Ore.-based subsidiary of TransCore.

Earlier this week, FedEx said it is expanding its International First service for early deliveries with the addition of 31 new origin countries, which will bring the total number of origin markets for the service to 97.

Monday, December 22 is pegged as UPS's peak delivery day, as the company expects to deliver more than 34 million packages that day, adding that it expects to see six days in December top last year’s peak shipment day delivery record of 31 million packages.

The time has come again for less-than-truckload (LTL) general rate increases (GRI), with various carriers recently announced their respective rate hikes in recent days.

Article Topics

News · Global · Economy · China · Grant Thornton · Brazil · All topics

About the Author

Josh Bond, Associate Editor
Josh Bond is an associate editor to Modern. Josh was formerly Modern’s lift truck columnist and contributing editor, has a degree in Journalism from Keene State College and has studied business management at Franklin Pierce. Contact Josh Bond

Comments

Post a comment
Commenting is not available in this channel entry.